The legal battle over the Obama administration’s cornerstone action to confront climate change, the Clean Power Plan, marked another milestone on Tuesday when opponents and supporters alike got their day in court in front of the U.S. Court of Appeals for the D.C. Circuit.
States, led by West Virginia, and industry groups challenged the rule, which requires the electric power sector to reduce its greenhouse gas emissions by 32% by 2030. They claimed the federal government has overstepped its authority in regulating such a significant portion of the U.S. economy, among other technical, legal arguments. The U.S. EPA, Department of Justice, environmental organizations, many other states, and several cities defended the rule; I think the defenders have the law right.
We won’t know the outcome from the courtroom drama for months while the D.C. Circuit determines its ruling. But does it matter? For perceptual, political and some practical reasons, yes. But on the whole, the ruling may not be as important as some are making it out to be.
A decision allowing the rule to go forward would show the world that the U.S. is serious about upholding its commitments made in Paris last December at a time when countries are deciding if and how they will follow through. And, it would surely make it more difficult for a Republican Congress and a potential Trump administration to halt EPA implementation. Having no legal justification to do so, they would no doubt face law suits from environmental advocates that press the EPA to move forward.
Such a ruling would also support the basic tenor of a majority of Americans. According to a recent poll conducted by the Energy Policy Institute at the University of Chicago (EPIC) and The Associated Press-NORC Center for Public Affairs Research, 65% of Americans think climate change is a problem that the government needs to address. Most also support federal regulations—like the Clean Power Plan—that would decrease U.S. coal consumption.
But the D.C. Circuit’s ruling is just a stopover for the Clean Power Plan. The real ruling will come from the Supreme Court, which issued an unprecedented stay on the rule back in February. How the Supreme Court will rule is anyone’s guess. If it heard the appeal at this moment, most experts anticipate that the court would likely divide four-to-four. The deciding vote will be whoever is appointed to fill former Justice Antonin Scalia’s seat. And it’s looking like we won’t know that until after the election.
Fortunately, the nation is already reducing greenhouse gas emissions even before implementation of the Clean Power Plan—though not as much as the country would with the Plan in place. This is because the electric power sector is in the midst of a rapid shift toward natural gas, renewables and more energy efficient techniques and technologies. Since 2007, emissions in the power sector have dropped 20%.
A few forces are causing this shift, with markets and technological innovation being major factors. With the advent of hydraulic fracturing in the U.S., the supply of natural gas has surged and, correspondingly, prices have sunk in recent years, while coal prices have largely stayed neutral. In 2010, the cost per megawatt hour of coal was about $111 and, as of 2015, dropped slightly to about $97. Natural gas prices have gone from about $92 down to $58 this year. (Though lower cost and lower emitting as compared to coal, the extraction and use of natural gas, of course, comes with its own set of environmental considerations and climate change implications.)
With the large price shift driven by old-fashioned forces of supply and demand, coal is having trouble competing.
At the same time, the cost of renewables such as wind and solar is also falling. In 2010, each megawatt hour of solar cost about $439. Today, it costs less than coal at about $84. Wind costs have also fallen from about $165 to $64. With the falling costs, industry and regulators are already finding ways to transition their grids to distributed energy sources.
While the markets and innovation are providing a natural shift away from coal, that isn’t to say regulations already on the books aren’t playing a role. Nationally, the Mercury and Air Toxics Standards—which establishes emissions limits for toxic air pollutants associated with coal combustion—have forced most coal plants to either come into compliance or retire the old and dirty plants. Between January 2015 and April 2016, about 87 gigawatts of coal-fired plants installed pollution control equipment and nearly 20 gigawatts of coal capacity retired. More retirements are anticipated.
Locally, states and municipalities are issuing their own requirements for renewable energy and energy efficiency. Currently, 29 states have renewable portfolio standards requiring that renewable electricity be a portion of what electricity utilities sell. Twenty-five states have binding energy efficiency targets. These demand-side regulations are also already pushing electric utilities to invest in renewable energy and energy-efficiency projects instead of fossil fuels.
As a result, coal-fired generation’s share of total electricity generation fell from 39% in 2014 to 28% in the first four months of 2016. Greenhouse gas emissions have likewise fallen.
This leads to my final reason why the judicial fate of the Clean Power Plan isn’t determinative of the nation’s energy future, as some are saying. For decades, most of the country’s greenhouse gas emissions came from the electric power sector. That’s precisely why the Clean Power Plan targets it.
However, with significant progress already being made in the power sector, there’s another sector that demands even greater attention now: transportation. As my colleague Sam Ori at EPIC pointed out, this year, for the first time since 1979, transportation eclipsed the power sector as the single largest source of U.S. carbon emissions. Reducing emissions from the transportation sector is going to be a lot tougher. (Ori gives a good explanation why in an earlier Forbes piece).
The nation would no doubt be better off with the Clean Power Plan. It would signal to the world community the U.S.’s leadership on climate. It would set a stringent baseline federal standard to ensure all states are doing their fair share to fight climate change. It would help to further level the playing field between dirty fossil fuels and clean renewables and energy efficiency. And it would ensure even greater emissions reductions in the power sector than the path we’re on. These would be incredibly valuable contributions and certainly justify implementation of the Clean Power Plan from a policy perspective, whatever the precise legal arguments.
But, if U.S. EPA and environmental advocates lose and the court does strike down the Clean Power Plan, there is still hope. After all, when it comes to reducing emissions in the power sector, we’re already making meaningful progress toward clean power, Plan or not.